Review of the Russian Dairy Market

During the period from 2017 to early 2018, milk output indicators (excluding raw milk) were unstable, the lowest figures falling on the summer months – for instance, 430,482 tonnes were produced in June. Starting with September 2017, indicators were demonstrating growth. Production volumes in January 2018 were higher than in January 2017, although indicators for February were fairly even. Throughout the whole year 2017, the volume of milk production amounted to 5,334,133 tonnes.

Unlike milk, cream production was more stable, and no strong seasonal fluctuations could be observed. 9,650 tonnes of cream were produced in January 2017, whereas the volume in December 2017 equaled 15,029 tonnes. Output volume for the whole year 2017 amounted to 153,036 tonnes.

Production of cheese is not subject to distinct seasonality, and only a slight drop can be seen during the winter season. In January 2018, the volume of cheese produced was 5,533 tonnes higher than in January of the previous year. The volume of cheese output on the whole during the year equaled 460,886 tonnes.

The volume of cheese product output in 2017 amounted to 193,320 tonnes. It is interesting to note that in November 2017, a sharp increase up to 27,309 tonnes was observed, after which the indicators returned to their previous state. The leap was due to the Siberian Federal District, the region where leaders in cheese production are located, having demonstrated growth in production indicators. The companies in question do not declare their performance indicators, and therefore it is difficult to tell which market player specifically increased its productivity so much.

In terms of quark output, January–February 2018 surpassed January–February 2017. In 2017, the lowest volume of goods was produced in August, the production indicator for the month amounting to 38,538.2 tonnes. Production of this category of goods is characterized by pronounced seasonality. The volume of quark production in 2017 amounted to 490,573 tonnes.

Production of yogurts has been demonstrating stable growth for many years. During the period from 2012 to 2017 output volumes increased by 59,437 tonnes. According to forecasts by experts, production indicators will demonstrate an increase in 2018 as well.

Consumer prices for pasteurized whole drinking milk in the Russian Federation have been demonstrating slight growth from month to month. Throughout 2017 the price increased by almost 2 rubles. A slight decline in prices takes place from late spring until autumn as well as after New Year. In late March 2018, the price for milk was at 53.17 rubles per liter.

The most expensive pasteurized whole milk could be found in the Far Eastern Federal District – its price in March 2018 equaled 69 rubles per liter. The cheapest milk was being sold in the Volga Federal District and cost 47.62 rubles per liter.

Prices per liter of sterilized whole drinking milk are higher than those for pasteurized milk by default – in January 2017 the price for the former equaled 71.15 rubles. In this category the price increase during the year almost reached 3 rubles, and by the end of March 2018 the price amounted to 74.01 rubles. Just like the category above, prices for sterilized milk go lower during the warm season and right after New Year.

The most expensive sterilized whole drinking milk was being sold in the Southern Federal District (78.66 rubles per liter), whereas the Volga Federal District demonstrated the lowest price of 63.93 rubles per liter.

According to the Federal State Statistics Service of the Russian Federation (Rosstat), prices for national cheeses and bryndza have been growing along with all the dairy goods addressed above. In 2017 they increased by 32 rubles. There is apparent seasonality in growth in prices for these cheese varieties: the lowest indicators throughout the year can be observed in May–June, whereas in December the price reaches its peak. In January 2018, a considerable increase in the price was recorded – from 422 to 443 rubles per kilogram (compared with January 2017, the price went up by 32 rubles). A decline followed, and in March the price equaled 437 rubles per kilogram.

The Far Eastern Federal District is leading in all cheese categories in terms of highest prices. In March 2018, the average price for national cheeses and bryndza in the region amounted to 566.33 rubles per kilogram. The lowest price for said products was observed in the Siberian Federal District, where it equaled 394.92 rubles per kilogram.

The situation with hard and soft rennet cheeses is practically the same – prices within the category are characterized by seasonality and drop starting with April; in autumn, prices begin to increase and reach their peak at the end of the year. In 2017, the price for hard and soft rennet cheeses grew by 13 rubles. Compared with January 2017, the price increased from 467 to 480 rubles per kilogram in January 2018. In March 2018, the lowest price was found in the North Caucasian Federal District and equaled 384.05 rubles per kilogram.

No price seasonality is present in the category of processed cheeses – prices simply increase during the whole year. A sharp leap took place in January 2018, the price having increased from 322 to 335 rubles per kilogram. During the year prices went up by 30 rubles. In March 2018, the Southern Federal District demonstrated the lowest price for the product – 246.54 rubles per kilogram.

It should be noted that prices for all cheese varieties continued to grow after New Year.

Growth in prices for yogurt had been slow and virtually unnoticeable – the total increase in 2017 was around 1 ruble. However, growth rates increased significantly in early 2018: while during the first 3 months of 2017 the average price for yogurts only increased by 14 kopeks, during the similar period of 2018 growth by 34 kopeks occurred.

In March 2018, the highest price for a 125-gram yogurt package was recorded in the Far Eastern Federal District and equaled 30.91 rubles, whereas the lowest price was observed in the North Caucasian Federal District – 18.69 rubles.

A comparison of drinking milk retail sales dynamics across Russian regions reveals that the Central Federal District is the leader, as the volume of goods sold there is substantially higher – in 2017, 133,843,237 rubles worth of goods were sold there. The lowest volume of retail sales during the year was demonstrated by the Far Eastern and North Caucasian Federal Districts – 9,160,738 and 7,680,638 rubles respectively.

Virtually the same state of things can be observed in the category of fat cheeses. The Central Federal District is the leader, having sold 167,844,260 rubles worth of products in 2017. The lowest retail sales volume was recorded in the Far Eastern Federal District and amounted to 8,957,815 rubles.

Imports of goods in the ‘milk and cream’ category into Russia throughout the period from 2013 to 2017 amounted to $ 1.07 billion and 1,245 thousand tonnes in value and volume terms respectively. The main product types imported were non-condensed milk and cream with the fat contend of more than 1% but less than 6% (66% of supplies), and milk and cream with the fat content of more than 10% (29% of imports). In the structure of imports by country, Belarus is first with the share of 82%, followed by Kazakhstan with the share of 6%.

Exports to Russia within the ‘milk and cream’ category in 2013–2017 amounted to 177 thousand tonnes valued at $ 130 million. The goods exported the most were non-condensed milk and cream with the fat content of more than 1% but less than 6% (77%), and milk and cream with the fat content of more than 10% (15% of supplies). The first and second places in the structure of exports by country are occupied by Kazakhstan and Ukraine with the shares of 45 and 25% respectively.

Imports of goods in the ‘cheese and quark’ group into Russia in the period from 2013 to 2017 amounted to $ 6.01 billion and 1,363 thousand tonnes. Goods in the ‘other cheeses’ category as well as young cheeses (fresh or unripened) and quark were the main product types imported, with the shares of 78 and 17% respectively. Belarus is first (49%) in the structure of imports by country, whereas the Netherlands are second (7%).

Exports of goods in the ‘cheeses and quark’ category from Russia during the time period analyzed amounted to $ 349 million in value terms and 120 thousand tonnes in volume terms. Exports mainly consisted of non-grated and non-powdered processed cheeses (50%), as well as young cheeses (unripened or fresh) and quark (36%). Kazakhstan is the leader in the structure of exports by country, having a share of 44%, whereas Belarus is second with the share of 19%.

To sum up, the following conclusions can be made:

* output in the product categories in question is rather stable and no strong fluctuations are being observed;

* growth in consumer prices is apparent, although it has been occurring gradually and smoothly;